The Market Monitor Minding the Nation's Business
Fitch Ratings predicts that the non-performing loan (NPL) ratio of Philippine banks will improve in 2025, driven by strong economic growth and lower interest rates.
According to Fitch, “We expect NPL ratio improvements across five out of 14 larger APAC (Asia Pacific) markets in 2025 before rising to nine in 2026.”
The Philippines, along with India and Vietnam, is expected to see significant improvements, largely due to robust economic expansion and increased loan growth.
As of October 2023, the Bangko Sentral ng Pilipinas reported that the NPL ratio of Philippine banks stood at 3.6%.
Fitch also forecasts double-digit loan growth in the Philippines, India, and Vietnam. “We expect banks in India, the Philippines, and Vietnam to have the highest risk appetite over 2025-2026, given robust economic growth, competition, and expanding financial inclusion,” it said.
This growth is expected to outpace most other APAC markets, where loan growth is expected to be in the single digits.
The report also notes that banks in the Philippines and India are increasingly focused on unsecured retail loans and lending to small and medium enterprises. In October, bank lending in the Philippines grew by 10.6%.